Tag: Economic fundamentals

Radical Imagination: Imagining How the World of Finance Really Works

Yves here. Get a cup of coffee. Another meaty chat with Michael Hudson, who focuses here on the role of finance in rent extraction. An important theme here that Hudson has stressed before is the mistaken perception of home “ownership”.  Only about 1/3 of homes in America are owned free and clear. For the rest, […]

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Tax Justice and Modern Monetary Theory – A Guide

Yves here. Aside from the fact that readers have indicated they’d like some breaks from COVID-19 programming, this post is important because it addresses what seems be a widely-held misperception of Modern Monetary Theory, namely, the role of tax. Modern Monetary Theory scholars stress that tax is what legitimates a currency. Individuals and businesses must […]

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The Coronavirus Stimulus Bill Is a $2 Trillion Slush Fund for Washington Cronies

Yves here. The financial crisis was such a successful exercise in looting the public purse that our oligarchs are at it again, this time via the “stimulus” bill. By Marshall Auerback, a market analyst and commentator. Produced by Economy for All, a project of the Independent Media Institute When historians look back on our current […]

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Covid-19 Hits the Dual Economy: Incomes Destroyed at the Bottom, Profits Supported at the Top

Yves here. Those of you well schooled in MMT will no doubt react to the fact that this post expresses concerns about “government debt” and does not differentiate between debts of states and local governments, which are currency users, versus Federal debt, when the Federal government as a currency issuer could extinguish its debt at […]

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What the Government Needs to Do Next to Tackle the Crisis

Yves here. What the government needs to do to address the medical system and real economy needs created by the coronavirus crisis. By James K. Galbraith, Lloyd M. Bentsen Jr. Chair in Government and Business Relations, University of Texas at Austin. Originally published at the Institute of New Economic Thinking website/strong> Tax rebates, tax cuts […]

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Debt and Power: An Interview With Michael Hudson

Yves here. Yet another informative talk with Michael Hudson on one of his key topics: why debt that can’t be paid won’t be paid. Here, he gives another riff on how ancient societies dealt with this issue and how modern lenders have gone off the rails. Originally published at Digital Finance Analytics [embedded content] Martin: Today […]

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At Long Last the Government Can Borrow Straight From the Bank of England – As Modern Monetary Theory Has Always Suggested It Should

Yves here. Even thought both Alan Greenspan and Ben Bernanke ‘fessed up that the Fed can create money out of thin air, and similarly, any currency issuing state can take advantage of that capacity, modern monetary theory has been treated like a taboo, and then more recently, voodoo. But now that governments are in “break […]

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Sanders Calls for ‘Unprecedented Legislative Response’ to Coronavirus Crisis—Not Corporate Bailouts

Jerri-Lynn here. Where is Joe Biden on any of this? Today is a momentous day in American politics. Congress is considering a multi-trillion dollar bailout plan, an attempt to calm free falling markets and shape the American economy for the foreseeable future. Alas, it looks like Congress is scrambling to implement a stimulus plan that […]

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Bailout Shenanigans: Making 2008 Look Good?

Because the legislative sausage-making is still underway, it might seem premature to declare the bailout bill underway a massive exercise in corporate welfare, but it sure has all the hallmarks. As Public Citizen warned by e-mail early Sunday evening (emphasis theirs): Senate Republicans just announced their long-awaited plan to help people and businesses weather the […]

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UN Chief Warns of Coming Recession for the Planet

Yves here. Recession strikes me as an optimistic take.  But then again, the UN has long sugar-coated its downbeat messages. By Evelyn Leopold,  a writing fellow and correspondent for Globetrotter, a project of the Independent Media Institute. She is an independent journalist based at the United Nations as resident correspondent. She was bureau chief for […]

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The Coming Fiscal Crisis Of State And Local Governments

Yves here. The collapse of highly taxed hotel stays, restaurant and bar business, and retail sales is on track to be an even harder blow for state and local governments than the financial crisis. The Obama Administration revived on a temporary basis, revenue sharing, a program created by that great American socialist, Richard Nixon. Readers […]

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IMF Refuses Aid to Venezuela in the Midst of the Coronavirus Crisis

Yves here. While you were busy trying not to panic over the impact of coronavirus on your health, your job and finances, or both, the IMF was holding fast to its punitive playbook. By Vijay Prashad, Paola Estrada, Ana Maldonado, and Zoe PC. Vijay Prashad is an Indian historian, editor and journalist. He is a […]

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Why Sending $1,000 Checks to Everyone Won’t Solve the Coronavirus Crisis

The coronavirus crisis is already biting even though very few US locations have gone for the full bore shelter in place route. However, widespread closures of schools, the elimination of restaurant business except for takeout and delivery, the closure of bars and entertainment venues, the collapse of tourism, and recommendations to stay at home are […]

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Debt and Financial Crises: Will History Repeat Itself?

Yves here. This post shows that how on a global basis, the economy was primed for a crisis due to the rapid rise of private sector debt in the wake of the 2008 meltdown. And as so often happens in debt binges, the money goes to not-very-productive activities, from overpriced college educations and share buybacks […]

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Coronavirus Means Zero Hour for the European Union

Yves here. We wrote yesterday of our concern that Christine Lagarde, the new head of the European Central Bank, wasn’t bluffing when she said that the ECB job wasn’t to close the spreads of various state borrowers like Italy. Italian bonds plunged. Lagarde made what looked to us like a half-hearted walkback. Understand how serious […]

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Brexit: The ‘Australian Option’?

Yves here. We’ve covered most of the Brexit issues presented here, but this is a very useful high-level take that could be helpful as a recap of the state of play for curious friends and colleagues. By Nick Dearden, director of Global Justice Now. Originally published at openDemocracy The fallout of coronavirus only adds to […]

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Why Sanctions Against Iran and Venezuela During a Pandemic Are Cruel

By Vijay Prashad and Paola Estrada. Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter, a project of the Independent Media Institute. He is the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He has written more than twenty […]

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Social Insurance in a Time of Pandemic: A Proposal for the Government to Act as Buyer of Last Resort

Yves here. Operationally, this is a clean, elegant proposal for having government step in to compensate for the likely collapse in demand produced by the coronavirus pandemic. And even though this may not seem very politically feasible right now, if economies start falling off cliffs, policy red lines will start being overridden. Notice the estimate […]

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The Fed Backfires: Shock and Awe Rate Drop to 0%, Emergency Bond Buying Program Leads to Limit Down Drops in US Equity Futures as Real World Coronavirus Damage Worsens

Investors reacted to the Fed’s unprecedented Sunday moves, of dropping the Fed Funds rate to 0%, launching a new $700 billon Treasury and mortgage bond buying program, increasing the size of dollar swap lines, and other measures, with revulsion. S&P futures and the Dow mini went to limit down in 15 minutes. The central banks […]

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How the COVID-19 Shock Is Different

Yves here. At least before Monday’s meltdown, I had some colleagues I had regarded as savvy maintain that the COVID-19 crisis wasn’t as bad as 2008 because it wasn’t damaging the financial system. I was shocked that they couldn’t see that the real economy damage could be lasting, and that there were also serious financial […]

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Oil Price Crash: 50% Of U.S. Shale Could Go Bankrupt

Yves here. Oil prices have reversed some of their Monday rout. Investors are also trying to take comfort from that, Xi visiting Wuhan, and Trump’s plan to cut payroll taxes. For instance, from the Financial Times: The fading sense of panic on Tuesday prompted investors to sell havens, which have rallied furiously in recent weeks. […]

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Mr. Market Loses It Over Coronavirus Risk: Oil Tanks, S&P Futures Trades Halted on Limit Down Overnight, Gold Jumps

It looks like a bloodbath is coming Monday for Europe and the US based on overnight trading in Asia. Coronavirus is showing that financial instruments can’t trump the real world. Mr. Market has finally digested that the world isn’t prepared for coronavirus and the US is particularly poorly set up to cope, thanks to our […]

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Airlines: Bleeding from Coronavirus, and Worse to Come

Yves here. It’s not looking pretty in the travel industry, particularly for players like airlines that have international business as important. Even casual readers of the press have heard about widespread coronavirus-induced cancellations of conferences, restrictions in some countries and regions of large gatherings, corporate travel bans, and scuppered sports matches, including possibly the Tokyo […]

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